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CFO:
Strong performance with
double-digit profit growth
How would you describe AAK’s financial performance
in 2019?
It has been a strong year where we have seen yearover
year growth in terms of volumes, operating profit,
operating profit per kilo, and earnings per share. This is
particularly impressive considering the challenges we
have had with low-yielding shea kernels in Chocolate &
Confectionery Fats and a more mixed performance in
Special Nutrition due to lower birth rates in China and
destocking by some global customers.
The continued double-digit improvement in operating
profit is in line with our ambition, and we have now had
36 straight quarters with record-high operating profit
quarter-over-quarter as well as a record-high full-year
result every year since 2010.
What is your comment on the cash flow?
To be able to meet future demand, we have continued
to invest in capacity and to make strategic acquisitions.
Despite this, we have had a positive cash flow after
investments during the last three years. We expect
capital expenditure to be at a slightly higher level in
2020 compared to 2019.
Cash flow from working capital was negative in
2019. Good working capital management on accounts
receivables
impacted cash flow favorably. This was
offset by strategic purchases of key raw materials to
Chocolate & Confectionery Fats which had a significant
negative impact on cash flow from inventory.
During the fourth quarter, we saw a sharp increase in
raw material prices, particularly for palm. This will have
an impact on our cash flow and working capital during
2020.
We continue our focus on working capital days and
further improvements should be possible, particularly
relating to payment terms with our suppliers and late
payments from some customers.
How do you allocate capital?
We always try to maximize our ability to invest in growth
and create a higher shareholder return. To ensure
continued growth, we want to have a strong balance
sheet and be well capitalized with a net debt/EBITDA
ratio lower than 3. Our current ratio is 1.10.
At the end of 2018, we established an MTN program
(Medium Term Note) with a framework amount of SEK
4,000 million. The program supports us in diversifying
our existing sources of funding and gives us a flexible
alternative to current bank facilities.
Over the last years we have invested significant
amounts in organic growth, built new factories, and
made several acquisitions to strengthen our footprint
and add new capabilities to AAK. Going forward, we will
continue to invest in growth, both in equipment and in
our employees, to secure that we can continue to be our
customers’ preferred co-development partner.
Fredrik Nilsson, CFO